EUR to USD Exchange Rate Recovers Even as US Manufacturing Surges

Early in European trading the Euro dipped briefly as Eurozone inflation figures showed that consumer prices in the currency bloc slowed unexpectedly.

However, the common currency’s loses were limited and short lived.

As the North American session got underway the Euro advanced on the US Dollar as investors rediscovered their appetite for higher yielding assets.

While the outcome of the Crimea referendum initially sparked a bout of risk aversion, as Russian stocks climbed currencies like the Euro and Australian Dollar were able to advance.

The US Dollar continued trading lower against the Euro even as domestic data showed a stronger-than-forecast increase in US industrial/manufacturing production.

Industrial production in the world’s largest economy increased by 0.6 per cent in February following a positively revised decline of 2.0 per cent in January.

Economists had expected an increase of 0.2 per cent.

Manufacturing production rose by 0.8 per cent last month rather than the 0.3 per cent expected.

January’s manufacturing output figure was negatively revised to a decline of 0.9 per cent.

The report appears to confirm that the US economy recovered well from the unseasonably harsh winter.

According to Bloomberg, the news prompted this response from strategist Gennadiy Goldberg; ‘Once the weather effects have rolled off, underlying demand is better than expected. The market got a little too pessimistic.’

Meanwhile, Labour Department figures revealed that payrolls in 27 US states fell in January with the biggest job losses occurring in California and Illinois.

The US NAHB Housing Market Index came in at 47 in March rather than the 50 expected.

Tomorrow the Euro could extend gains against the US Dollar if ZEW economic sentiment surveys for Germany and the Eurozone show improvement.

Although economists have projected that the German confidence gauge slid from 55.7 to 52 this month, recent German data has largely surprised to the upside. If this data follows suit the Euro could benefit.

However, with US inflation figures also due for publication tomorrow additional Euro to US Dollar volatility can be expected.